Time Warner Supports U.S. Postal Service Elimination of Saturday Delivery

By Angela Greiling Keane -
May 11, 2010

Time Warner Inc., publisher of more
than 20 U.S. magazines including Sports Illustrated and People,
said it supports the Postal Service’s proposal to eliminate
Saturday mail delivery to save money.

The newsweekly Time would have to change editorial,
production and delivery cycles to accommodate the change, said
Jim O’Brien, vice president of distribution and regulatory
affairs at the company’s Time Inc. periodical division.

“We rely on the Postal Service to deliver our magazines,
our direct mail and our bills,” O’Brien said today in a
telephone interview. “It’s a critical component of our supply
chain. We need a healthy Postal Service.”

The U.S. Postal Service, which lost $1.6 billion last
fiscal quarter, is making the case to customers, Congress and
regulators about “the reality going forward” that mail volume
will continue to decline as consumers switch to electronic
communication, Postmaster General John Potter said.

“It’s very important that the Postal Service is getting
its big mailers behind them,” said David P. Hendel, a partner
with Husch Blackwell Sanders LLP in Washington who represents
postal suppliers and isn’t involved in the Saturday delivery
debate. “If they support it, you have to think they’ve studied
it and come to the conclusion that out of some bad options, this
is one of the best ones.”

Meeting With Time

Potter met with Time Inc. Chairman and Chief Executive
Officer Ann S. Moore about the need to cut delivery to five days
a week from six. Time Warner is the biggest publisher to declare
its support for the proposal, said Joanne Veto, a Postal Service
spokeswoman.

“They came in and expressed some concerns,” Potter said
today in an interview at Bloomberg’s Washington office. “I
explained the economics and they quickly came around.”

The Postal Service has said eliminating one delivery day
would save $3 billion a year. The Washington-based agency has
said it may lose $7 billion this year and a cumulative $238
billion by 2020 as mail volume and revenue decline.

The agency is required by law to deliver to about 150
million addresses six days a week, and will need Congress to
approve a cutback in service. Its regulator, the Postal
Regulatory Commission, is reviewing the proposal and will issue
a non-binding opinion.

Mail volume dropped 6.3 percent in the six months ended
March 31, Postal Service Chief Financial Officer Joseph Corbett
said last week. The agency cut work hours 7.5 percent in the
period.

Newspaper Objections

The National Newspaper Association, which represents small
newspapers that use the mail to deliver their publications,
doesn’t share Time Warner’s position.

“We are opposed to it,” Tonda Rush, public policy
director for the Columbia, Missouri-based association, said in a
telephone interview. “Or at least we think it should be a last
resort measure and certainly not at the top of the list before
other cuts are explored.”

“A lot of newspapers around the country have Saturday
issues in the mail,” she said. “If they arrive in the mailbox
on Monday, they’re no longer a newspaper, they’re a history
book.”

Rita Cohen, a senior vice president with the Magazine
Publishers of America, didn’t respond to a telephone call
seeking comment. The New York-based association represents about
225 U.S. and 50 international publishing companies, according to
its website.

In addition to magazines, New York-based Time Warner owns
the Warner Bros. film studio, the HBO pay-television network and
the television channels once controlled by Ted Turner including
CNN and TBS.